Corporate bonds generate higher rates of return than U.S. Treasury bonds ResponsesTrueTrueFalse

An analyst observes the following historic geometric returns: Asset Class Geometric Return (%) Corporate Bonds 5.5 Equities 8.5 Treasury bills 3.5 Inflation 2.1 The real rate of return for Corporate Bonds is closest to: Question 11Answera.3.33%b.3.40%c.1.03%

Everything else held constant, the interest rate on municipal bonds rises relative to theinterest rate on Treasury securities whenA) income tax rates are lowered.B) income tax rates are raised.C) municipal bonds become more widely traded.D) corporate bonds become riskier.

Which of the following statement is true? • Corporate bond yields are generally lower than government bond yields for bonds having the same coupon rate and maturity. • The spread of junk bond yields over that of Australian Government Bond is generally lower than the spread of investment-grade bonds over that of the Australian Government Bond. Once a bond defaults, bondholders can no longer receive any residual payment from the bond. • Two bonds have the same maturity, risk rating, and face value, but have different coupon rates. The bond with a lower coupon rate carries greater risks.

______________ is issued by corporations and typically has a higher yield compared to government securities?Treasury billsCommercial paperRepurchase agreementsNegotiable certificates of deposit

Government bonds have lower yield to maturity than do corporate bonds of the same maturity because the ________ premium is lower for government bonds. A. interest rate risk B. inflation C. default